Segal found guilty

Insurance firm also convicted

June 22, 2004|By Matt O'Connor, Tribune staff reporter.

Michael Segal, one of Chicago's most influential and politically connected businessmen, was convicted Monday for raiding a company trust fund to support a lavish personal lifestyle and expand his business.

Segal, 61, with posh homes on North Lake Shore Drive and in Highland Park, appears likely to be jailed as soon as Tuesday and faces a minimum of 20 years in prison, authorities said.

After a trial that took two months to complete, the eight men and four women on the jury arrived at their verdict with surprising swiftness after about eight hours of deliberations.

Segal looked on as his lawyer kept a tally of all the guilty verdicts--26 counts of mail and wire fraud, racketeering, false statements, embezzlement and tax conspiracy. A Segal employee wept on word of his conviction.

Segal's company, Near North Insurance Brokerage Inc., was also convicted on all of its 21 counts.

To convict Segal of racketeering, the jury had to find him guilty of only two acts but instead decided he committed each and every act charged--46 in all.

The same jury returns Tuesday to decide if Segal must forfeit as much as $35 million in customers' insurance premiums that prosecutors contend he stole from a trust fund that by law must be held in reserve until paid out to insurance carriers.

At least 20 years in prison

In seeking to have Segal jailed immediately, prosecutors said he faces a minimum 20-year prison term, which could ratchet up pressure on him to cooperate if he has anything to offer on his many powerful political and business friends.

In a telephone interview late Monday, Segal said he was disappointed at the quick verdict, but he refused to criticize the jury, citing the complexity of the case.

"Insurance is very esoteric. It's hard to get to the core of the evidence if you have all this other rhetoric," said Segal, referring in part to what he called the "highly inflammatory names" with which prosecutors labeled him.

Segal questioned why prosecutors brought charges against him, saying, "This is an insurance regulatory issue. How do you parse out when the federal liabilities come in?"

When the jury came back so quickly, Segal said he was prepared for the worst. He said he is strongly considering an appeal.

Prosecutors alleged Segal misused the trust fund in myriad ways--doling out illegal discounts on insurance to dozens of prominent political and business leaders and reimbursing thousands of dollars in political contributions made by Near North executives at Segal's behest.

The VIP list of customers to whom Segal gave free or discounted insurance included Chicago Ald. Edward Burke (14th), former U.S. Rep. Dan Rostenkowski, White Sox and Bulls owner Jerry Reinsdorf and former Cook County Board Chairman George Dunne, a co-owner of Near North with Segal for many years.

Testimony also indicated Segal had business dealings with Cook County Commissioner John Daley, the brother of Mayor Richard Daley, and George "Homer" Ryan Jr., son of former Gov. George Ryan.

His business faces probation and a potentially hefty fine. No sentencing date was set Monday.

Citing the lengthy prison term and risk that Segal might flee the country, prosecutors William Hogan Jr., Virginia Kendall and Dean Polales sought to have his $1 million bail revoked and Segal taken into custody.

U.S. District Judge Ruben Castillo allowed Segal to remain free overnight but ordered that he be fitted with an ankle monitoring bracelet.

The judge also issued an ominous warning that he was likely to have Segal taken into custody after the jury's duties were completed Tuesday, saying that some "mighty lawyering" would be needed to convince him otherwise.

The judge forbade Segal from venturing toward either Chicago airport or "you will be taken into custody."

"That is the furthest thing from my mind," Segal told the judge.

With the jury's duties unfinished, both prosecutors and lawyers for Segal declined substantive comment on the verdict outside the courtroom.

The defense held throughout the trial that there were no victims in the government case, that no insurance carrier went unpaid, and that no customer went without insurance.

In closing arguments last week, the defense lawyers also raised questions about why prosecutors hadn't called several former Near North executives, including Daniel Watkins, an admitted embezzler, and others they accused of taking advantage of the trust fund woes by trying to wrest control of the company from Segal.

But Polales had a simpler explanation for why the government didn't call Watkins, asking jurors, "Haven't you heard enough [evidence]?"

Prosecutors contended Segal reported the trust fund deficit to state regulators only after an exodus of upper management in 2001 led him to fear that his wrongdoing was about to be exposed by the former executives.

Ex-Gov. Ryan's help sought

According to testimony, Segal leaned on his friend, then-Gov. George Ryan, to ward off an investigation by the Illinois Department of Insurance.